Shanghai Electric Power Co., Ltd. (002463): Deep Plowing High-Multilayer PCB for 30 Years, 5G Era Returns

Shanghai Electric Power Co., Ltd. (002463): Deep Plowing High-Multilayer PCB for 30 Years, 5G Era Returns

Shanghai Electric Power reported a high growth rate and forecasted the first three quarter results of 8-9 megabytes, followed by a growth of 109% -135% and then exceeding expectations.

Driven by downstream demand, the company’s accumulation of high-level board technology and customer resources ushers in a period of heavy harvesting. In the long run, the barriers to communication and automobile board rise and will continue to benefit from the high-end upgrade of customer products.12/16/2 billion, corresponding to 0 EPS.

70/0.

93/1.

17 yuan, corresponding to the current expected PE of 28/21/17 times, is still underestimated, the first coverage is given a “strong recommendation-A” rating, target price of 25 yuan.

Thirty years of deep multi-layer printed circuit boards, focusing on communications and automotive dual tracks.

The company was established in 1992 in Kunshan, Jiangsu. It is one of the first Taiwan-funded enterprises established in Kunshan and went public in 2010. Its products are mainly communications, automotive, industrial equipment PCBs, etc. 2019H1 communication boards account for about 65%.It accounts for about 20%, and office equipment and industrial equipment boards account for about 8%.

There are three major characteristics in reviewing the company’s development history: 1) before certain fame and deep accumulation of technology and customer resources; 2) the performance of the relocation plant was affected, but the growth constraints were lifted;The consumer market is gradually fading out; the demand for the communications board business is driven, and the profit elasticity is expected to continue to be released.

The communication board business is the backbone of the company’s profit. The top five customers include three global mainstream communication equipment vendors (H customers, etc.), and a leading server and switch supplier (S customer).

Under the trend of the 5G accelerated enabling PCB industry, the replacement of wireless devices in the early stage 杭州夜网 will drive the demand in the first stage, the expansion of medium- and long-term supporting network capacity and the expansion of terminal equipment such as CPE will drive the demand in the second stage.The technology upgrade trend drives demand for high-level PCBs.

The company’s long-term card high-frequency, high-speed multi-layer circuit, good market structure brings profit margins, and considering that the company has a first-mover advantage in overseas markets with better profitability, we believe that the company’s communications board business will continue to be profitable.Release; automotive board positions high-end customers to build a second growth engine.

Although the demand for short-term automotive panels is under pressure, the mid-to-long-term demand will gradually expand and upgrade under the trend of intelligentization and electrification.

Although the mid-to-low-end automotive PCB market is fiercely competitive, the mid-to-high-end market has high certification barriers and a long period of time, and the cost of quality and control in production is very high. It is not suitable for new entrants to make quick profits in the short term, and it is more suitable for core suppliers who have already enteredThe companies in the circle gradually replace the leading companies whose competitiveness has declined due to poor investment and other factors. The company is already a core high-end automotive board supplier such as China. The long-term goal is to enter the top three global automotive PCB markets. The automotive board business will becomeThe second engine of growth; investment advice.

We are optimistic that the profit elasticity of the company’s communications board business continues to be driven by downstream demand. The automotive board business ranks among the top in the industry in the medium and long term. We estimate that the net profit of the company will be 12/16/2 billion in 2019-2021, corresponding to 0 EPS.

70/0.

93/1.

17 yuan, corresponding to the current expected PE of 28/21/17 times, which is still underestimated. It is optimistic about the continued elasticity beyond expectations. For the first time, it is given a “strong recommendation-A” rating with a target price of 25 yuan. Risk warning: 5G gradually exceeds expectations, macroRisks of economic fluctuations and increased competition risks.

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